NIO released the 2023 Quarter 1 financial report Long Bridge US stocks premarket on June 9, Beijing time. Another large area of "spicy eye" performance, if the fourth quarter of last year is poor, the first quarter of this year is still a "strengthened version":

1. Poor sales and poor income:$NIO – SW.HK revenue 10.70 billion, and less than the market expectations, the 1 billion +, the sales difference is known, the key is because of the volume price, the old car, 75kwh entry models accounted for more, resulting in a unit price of only 297,000, significantly lower than market expectations.

2. Gross margin collapse: As the unit price fell below 300,000 for the first time, much lower than the previous guidance implied unit price of about 320,000,The gross profit margin of the car fell directly to 5% without impairment and other operations, far lower than the market expectation of about 10%. Obviously, the damage caused by the price reduction of the old model and the low gross profit margin of ET5, the capacity utilization rate in the process of platform replacement has particularly serious damage to NIO.

3. Guidance mediocre: second quarterGuidance sales 2.3 – 25,000 units, due to the known sales in April and May, implied sales in June after the release of the new ES6, finally began to stand on the 10,000, guidance implied sales in June should be about 11,000. And the company’s goal is that ET5 + ES6 double top stream can bring 20,000 monthly sales, this guidance is still significantly different from this goal.

However,$NIO. SG The price of implied bicycles behind the revenue guidance 87-9.40 billion may recover to about 320,000, the proportion of implied inventory vehicles may decrease, and the gross margin should recover.

4. NIO who is still "voting":Although the gross profit has dropped to less than 20,000 yuan, NIO wants to do a lot of things in R & D and needs to "warm up users". The investment in R & D and sales expenses has not seen obvious restraint. The operating loss rate hit a three-year high, reaching 48%, significantly higher than market expectations.

Dolphin Jun’s overall perspective:

For new forces with a very short period of new car explosions and repeatedly falling into the green and yellow of changing cars, Dolphin Jun naturally has a red label of "suspicious execution". Obviously, the current NIO is such a company.

Therefore, the previous share price of 9 yuan has fallen to the PS valuation level between life and death in 2019. Dolphin Jun proposed that companies with too big dreams and too weak execution cannot talk about bottom fishing lightly. By this financial report, the company’s share price was hovering at 7-8 yuan, and bottom fishing did not generate profits.

Of course, from the perspective of marginal changes, this performance is basically the bottom of NIO’s performance: because NIO’s double-top streaming car ES6 went on sale at the end of May and the ET5 hunting version went on sale in June, two promising cars began to contribute to full sales in the second half of the year, and all other models will basically transition to the NT2.0 platform. Sales and gross profit margins are unlikely to be worse, and will only go in the direction of improvement.

In the corresponding stock price, along with the improvement of sales volume and gross profit margin, there is also hope to slowly climb out of the bottom. But how much can be pulled up from the bottom, or can it return to the previous height? It depends on how much the original new power brother reflects on this wave of mistakes, and how much the execution improves. Dolphin Jun has doubts. At least to see the change of attitude first, you might as well listen to what NIO has to say in the phone call.

First, stronger than painting cakes, weaker than landing: NIO, it’s time to reflect

Let me remind you of the two core goals of NIO’s delivery this year:

1)NIO aims to deliver 250,000 vehicles this year.

2) By the fourth quarter, the monthly sales should stand firm 30,000 vehicles: the two pillar cars ET5 + ES6 have a total monthly sales of 20,000, ET7 + ES7 + ES8 have a total contribution of 8k-10k vehicles, and the two coupe EC6 and EC7 have a total monthly sales of about 2k vehicles.

Goals vs reality, let’s compare:

1) By the end of the first half of this year, the delivery was probably on 55,000 vehicles, barely completing a little more than 20% of the annual target. In the case of just climbing 10,000 in June, it is equivalent to 32,500 monthly delivery in the second half of the year, which means that the hope of achieving the 250,000 goal for the whole year is very slim.

2) Monthly sales 30,000 target vs May 6k reality: In May, due to NIO’s two top-class models – ES6 replacement and ET5 hunting car to be released, the new ES8 was launched in June and EC6 was launched in July; the new EC7 was relatively niche, and it was just launched and basically did not contribute to sales;, in addition, the market demand for ET7 and ES7 models that are not being replaced is weak, and the final result is that NIO sold a mere 6,155 units in May, even lower than in April.

On the list of new car makers in May, the original first brother has almost slipped to the bottom.

Fortunately, looking ahead, it should be the worst time for NIO nowFrom the perspective of the release rhythm of the model, NIO’s two promising contributions to large sales ET5 and ES6:

ES6: As the best-selling SUV in the NIO model matrix, on May 24 this year, NIO released an updated version of ES 6 (competitors mainly include Model Y, L7, etc.), and deliveries began that night.

According to market survey information, within 72 hours of ES6 release, the average intention of a single store was 90 orders, 20 prepaid orders, and ES6 contributed 60-70% of the incoming traffic. Preliminary data seems to be good.

2.) ET5 prey version: released on June 15 and delivered in the same month ET5 prey version, prey version will optimize the current ET5 rear space, it is estimated that part of the original wait-and-see ET5 lead.

After the two NIO top-class models are all launched in June, the monthly sales of tens of thousands is a reasonable expectation for the market. So from this quarter, the second quarter sales guidance given by NIO 2.3-2 5,000 vehicles are only within expectations.

Due to the sales volume of 6.7k in April and 6.2k in May, this guide implies that the sales volume in June is 11,000, which is basically the same as the market expectation of 10,000 vehicles in June. There is no further shock, but it is obviously not a surprise.

Overall, NIO has not really exploded in this cycle of car replacement, from new cars such as ET5 to the present. Compared with the ideal replacement cycle, the replacement time of NT2.0 models has been delayed for too long, and the problem is still obvious.

When the automotive market had long since entered the era where demand was king, NIO wanted too much, and its execution was still stuck in the era of "supply is king", completely unable to keep up with its peers who were crazy about rolling in.

Finally, from the perspective of the actual delivery volume in the first quarter, only 31,000 vehicles were achieved, barely reaching the lower limit of the original target 3.1-3 3,000 vehicles.

Fatal Expectation Spread: Gross Margin Revisited

Behind the poor sales volume, the gross profit margin was pulled again, and the severity exceeded the one-time impairment 1 billion due to "inventory impairment provisions, accelerated depreciation of production equipment, and loss of old 866 purchase agreement" in the first quarter.

In the first quarter of this year, NIO’s gross profit margin of automobile sales was only 5.1%, while the gross profit margin of automobiles 1 billion one-time factors was 13.5% in the last quarter, while the market’s expectations for the gross profit margin of automobiles in the first quarter were basically in double digits, basically between 10% and 12%.

Specifically, consider the bicycle economy.

1) In the first quarter, bicycle revenue hit a record low, falling below 300,000 for the first time, only 297,000, and the cost of bicycles directly fell 70,000.

Of course, the reason is also obvious. During the new car replacement period, the old 866 model has exhibition car clearance, national subsidies, and financial discounts, etc.; while the unit price of the new ET5 itself is lower than that of the previous models, the gross profit margin is also low, and the average price decline is normal.

2) Now that NT1.0 is converted to NT2.0, the intermediate capacity utilization rate is very low, which will also drag down the gross profit margin; the cost of a bicycle cannot go down synchronously with the price of a single car, and the gross profit of a bicycle is further reduced by 3,000 yuan compared with the fourth quarter, and the gross profit margin is directly pulled from 6.8% to 5.1%. The standard gross profit margin for car manufacturing should be around 20%, which is too large.

Fortunately, looking ahead, NIO couldn’t be any worse.

The company’s guidance for the second quarter revenue is between 87.4 and 9.37 billion. Dolphin Jun’s estimated bicycle revenue should be about 32.5-33 million, and by the end of the second quarter, basically all NIO models have been transferred to the NT2.0 platform.

In addition, although the overall price of lithium carbonate has reached about 300,000 from the beginning of the 190,000, compared with the previous 500,000, there is still a trend to fall, and the decline in battery costs will also help NIO to ease the cost pressure.

Of course, under the brand tone of NIO’s "no price reduction", the real increase in gross profit margin still depends on whether NIO really reaches the target of 30,000 monthly sales and pulls up the capacity utilization rate. And on this point, Dolphin Jun is still skeptical:

1) In terms of the current trend, the Chinese luxury car market above 30w seems to have a relatively tenacious vitality of fuel vehicles, and the penetration rate is relatively slow. At present, it is less than 20%, which is not as good as the overall pure electric penetration rate.

2) In the absence of insufficient facilities such as fast charging/power exchange, when pure electric luxury cars further go out of first-tier cities such as Shanghai and further penetrate into the lower-tier market, it seems that there is no ideal range extension model that can better target user pain points.

Third, the income pulls the hips, the natural result of poor sales

NIO’s revenue 10.70 billion in the first quarter, growing by only 8% year-on-year, significantly lower than the market consensus expectations 11.60 billion, clearing inventory and other low unit prices are the core issues.

The only thing that came up a little bit this quarter was auto revenue other than auto sales, which hit 1.45 billion this quarter, a lot more than the market expected 11-1.20 billion.

NIO’sOther business revenue sources primarily include revenue from the sale of energy and service packages, as well as revenue generated from embedded products and services that go hand in hand with vehicle sales, such as charging stations, in-vehicle internet connectivity services, and more.

The company has always maintained a high-end strategic positioning, hoping to provide better service and experience to car owners in terms of brand management and user community through better gross margins.

Data source: company earnings, Long Bridge Dolphin Investment Research

Data source: the company’s official website, Long Bridge Dolphin Investment Research

In addition, at the Berlin conference of NIO last October, the overseas models were mainly charged by fixed lease and floating subscription. For example, the rental time provided by the fixed rental fee is generally 1-5 years, and the fixed monthly rent is adopted. For short-term flexible cars, monthly subscriptions can be used. Short-term subscriptions can be cancelled at any time two weeks in advance. Vehicles can be replaced at will, and as the age of the car increases, the monthly fee will be reduced accordingly.

The additional growth in other revenue this quarter is expected to be related to NIO’s overseas sales growth: from January to April, NIO sold more than 150 vehicles in Germany, more than 184 in Norway, and more than 450 worldwide, which should contribute to this part of the revenue.

But the problem here is that, because these markets are in the early stages of development, when they contribute revenue, they basically lose money early on. So the rest of the business saw revenue increase this quarter, but the losses were also severe: less than 1.50 billion revenue in the first quarter, costs were almost 1.80 billion, and the gross loss ratio was 21%.

IV. Gross profit is almost "zero"

If the fourth quarter NIO gross profit was miserable, the first quarter was even more miserable, because other income business directly gross loss, and the car sales business sold cars 9.20 billion, only earned less than 500 million gross profit. The overall group level gross profit is only 160 million, no better.

Invest "a lot of money"

Although after subtracting external costs, only gross profit 100 million, but expenses are not less: R & D expenses 3.10 billion, basically within the normal range between 30 and 3.50 billion of the company’s original quarterly guidance; sales and administrative expenses 2.45 billion, just a little less than the market expected 2.70 billion.

Overall, due to the fact that NIO wants to do too many things and has too many dreams in R & D, the possibility of cost reduction in R & D is very small. So far, I have not seen it openly reflect on cost reduction and efficiency like Xiaopeng.

In the sales system, NIO has always been a "warm user" approach, and sales have not seen very clear signs of control.

Six, NIO has passed the life and death tribulation again

The same painting style as the fourth quarter, but it came more tragically: delivery pulling hips, income pulling hips, gross profit margin pulling hips, cost and investment rigidity, and operating profits are hotWhat is it?

The single-quarter operating loss 5.10 billion; the operating loss rate was 48%, a new high in the past three years.

Summary:

In the eyes of Dolphin Lord, internal reflection and rapid adjustment in the current state of NIO may be more important than boasting and describing the grand blueprint of 5-10 years.

　　Navigation software can speed us up, but we can also find wonders in the "slow life"; navigation software can allow us to travel far, but we should not give up our sense of the nearby environment

　　Walking on the street, opening the phone to browse the navigation interface to confirm the destination; coming to an unfamiliar place, clicking on the navigation to explore in place, hoping to find the east, west, north and south… Nowadays, navigation software has been integrated into daily life, playing an increasingly prominent role in optimizing traffic operation and saving commuting time.

　　Objectively speaking, navigation software is the product of technological progress. For a long time in history, finding the way was a practical need faced by people. To avoid getting lost, the ancients relied on well-made markers, or unfolded simple maps, or asked strangers for directions. The verse "Ask where the restaurant is, and the shepherd boy points to Xinghua Village" vividly depicts the scene of asking for directions. In reality, whether it is marking or asking for directions, it is difficult to match the accuracy, convenience and experience of mobile phone navigation.

　　Today, with the help of navigation software, finding the way is no longer a problem. In 2020, our country built the Beidou-3 global satellite navigation system to provide services to the world. In space, the Beidou navigation satellite operates day and night, providing location information services to countless end points. On the ground, whether driving, cycling or walking, people open the mobile phone navigation software and follow the prompts to reach their destination. With the development of the economy and the deepening of urbanization, the popularization of navigation technology helps people reach the place they want to go more quickly and effectively, and also makes mobile China more vibrant.

　　However, there are also scientific studies showing that over-reliance on navigation software may cause the brain to reduce its interaction with the surrounding environment. Not only that, but navigation not only provides us with location information, but also affects our route choices at all times, shaping our cognition of space and time. For example, the destination search function allows us to automatically pop up options without looking for a specific location on the map; the route recommendation function, so that we no longer need to choose a route based on experience. In a sense, navigation software does allow us to cross a specific space in the least time, improving the efficiency of space-time conversion, but it may also make us miss the scenery along the way.

　　In the fast-paced modern society, the importance of efficiency is self-evident. But while pursuing speed, how to perceive the environment more richly and better understand the relationship between ourselves and the wider world is also a topic of "on the road". In the past, Xie Liang, the old man, volunteered to guide others for 16 years, which made many new visitors to Beijing feel the warmth of the city; now, with a mobile phone in hand, many people do not want or need to ask for directions. Once, the buildings, streets and flowers and trees of the city were deeply embedded in our memory when we knew the way; now, the route that some people remember best is the section from the subway station to the bus station. To a certain extent, focusing only on the connections and numbers in the navigation software can easily make people ignore the natural, historical, and cultural elements in the environment, as well as the fireworks, human touch, and beautiful scenery around them, thus losing the fun of "people on the journey" in a hurry.

　　Today, navigation software has become a necessity for many people’s lives. It is worth thinking about how to better integrate technology into our lives. Navigation software can make us faster, but we can also find wonders in the "slow life"; navigation software can allow us to travel far, but we should not give up the feeling of the nearby environment. Keep a heart of discovery, and maybe you will find that the convenience of navigation software and the beauty of the city have always been there.

　　"People’s Daily" (April 19, 2022, edition 05)

　　[Global Network Technology Report, Reporter Chen Jian] In recent years, the development speed of China’s technology has changed with each passing day. China’s technology industry has also led the transformation from "Made in China" to "Created in China". Today, a group of Internet companies represented by Xiaomi have emerged in China. They focus on quality, so that "Made in China" gradually gets rid of the traditional impression of low price and low quality in the eyes of the world.

　　In 2017, Xiaomi rose against the trend

　　2017 was a year of fruitful results for China’s technology industry. A large number of representative major scientific and technological innovations such as Jiaolong, Tianyan, Wukong, Mozi, Huiyan, and large aircraft have emerged one after another, constantly refreshing the public’s scientific and technological perception. Quantum regulation, iron-based superconductivity, and synthetic biology have entered the world’s leading ranks, continuously enhancing people’s sense of scientific and technological pride. But after all, these cutting-edge things are still far from people’s lives, and people still feel the progress of science and technology from daily consumer electronics. The update and iteration of mobile phones, TVs, and other products have made people feel the strength and confidence of domestic brands. Even in many regions around the world, people are eager to enjoy the experience brought by Chinese electronic products.

　　2017 was not an easy year for the mobile phone industry and the TV industry. In the field of home appliances, according to the total data of Aowei Cloud Network (AVC) omni-channel push, the retail sales volume of the color TV market in 2017 was 47.52 million units, a year-on-year decrease of 6.6%. The increase in panel prices from the end of 2016 to 2017 caused many color TV companies to increase costs, and their net profits fell one after another. Coupled with the decline in market capacity and sales, many companies experienced negative growth, which was miserable. Even the extremely hot Internet brands have lost their voice, and some Internet brands have even suffered "premature death".

　　In the field of mobile phones, according to the data, the domestic market shipments 491 million in 2017, down 12.3% year-on-year. Especially in the fourth quarter of 2017, the decline in shipments exceeded 20%, and the market reshuffle was further intensified. Due to the acceleration of the industry reshuffle in 2017, the concentration of mobile phone brands was further enhanced; China, O, V, and Mi grew rapidly, ranking three to six in the global TOP10 brand shipment rankings in 2017, followed by Samsung, iPhone.

　　In the context of the global downturn, Xiaomi, which was sung bad in 2016, suddenly made a comeback and hit a lot of people in the face. According to data from Oviyun.com, Xiaomi TV 4A 32 inches was officially mass-produced from July 10, 2017, and 1 million units were officially offline on March 9, 2018. Xiaomi TV 4A 32 inches reached the sales volume of 1 million units in only 8 months. This data is of great significance in the TV field, because at present, in the domestic TV sales, only another Internet TV 40-inch and 50-inch TVs have reached a single product sales of over one million, but it took 13 months and 24 months respectively. And Xiaomi mobile phones have re-entered the top five in China.

　　Xiaomi TV is applauded at home, and Indian rice noodles are even more crazy for it

　　The reporter looked at the evaluation of major e-commerce platforms, and the Xiaomi TV 4A 32-inch has a high praise rate of 99% on Suning.com, and even 100% in JD.com. And according to the reporter’s survey, the repair rate of Xiaomi TV has been controlled to 0.43%, far below the industry average of 2.5%, and the good quality has led the industry by a large margin. The quality control of any product is also the key to the success of this product.

　　In overseas markets, taking India as an example, Xiaomi’s TV has also achieved impressive results. On the day of Xiaomi TV’s first sale in India on February 22, Xiaomi TV 4 55-inch 10-second lightning sold out. After the release of Xiaomi TV 4 A series 32-inch and 43-inch new products, it was snapped up by Indian fans, even to the extent of exaggeration than in China.

　　India’s TV market is also in a period of transition. Many ordinary users can only choose expensive international brands or relatively low-priced but outdated models. After the thousand-yuan Xiaomi TV products enter India, they can fill the gap in the market. As an Internet company, Xiaomi also makes localized customizations for local users in India.

　　While Xiaomi TV is recognized by Chinese consumers, it will once again go out to the world as a representative of new domestic products. Not long ago, the news of the Sri Lankan brother grabbing Xiaomi TV and flying home was still vivid in my mind. On social platforms, Indian netizens also expressed a kind of love for Xiaomi. Some Indian netizens even said that "when they see Xiaomi TV, their eyes can’t move".

　　Xiaomi wants to enhance the global influence of the "Made in China" brand

　　It is precisely because of the emergence of companies like Xiaomi that the "foreign brand" life of the mobile phone and TV market is miserable. As a global hegemon, Samsung once occupied the first position in the Chinese market in the mobile phone field. In just a few years, due to the rise of domestic manufacturers, Samsung’s current market share in China has been less than 1%. In the field of home appliances, Samsung, LG, Sony and other TV manufacturers are currently unable to compete with Xiaomi and Hisense in small-size TVs, so they have to focus on the high-end market above 55 inches.

　　Wang Chuan has said many times: "Adhering to high cost performance and saving every penny for users is the core value of Xiaomi." In an interview with reporters, Wang Chuan of Xiaomi TV said that Xiaomi has a saying that always believe that good things are about to happen. Wang Chuan believes that as long as everyone does their best to make the product really good, and then is willing to be kind, willing to learn from Lei Feng to do good things, and provide it to customers, they will definitely win the love of users. Although I did not expect to achieve 1 million in such a short time, it is actually a natural thing. As Bezos said, there is a company that reduces costs by forcing itself to continuously improve efficiency, and then provides users with better and cheaper products. This is the case with Xiaomi.

　　According to the reporter’s understanding, Xiaomi TV will also explore more markets this year, bringing the excellent experience of Xiaomi TV to the world. The only major difficulty currently plaguing Xiaomi TV is the issue of production capacity.

　　Lei Jun recently proposed at the two sessions to enhance the global influence of the "Made in China" brand and comprehensively improve the level of Chinese design. In recent years, the MIX series designed by Xiaomi has been collected by three major museums around the world, and Xiaomi TV and its ecological chain products have repeatedly won international design awards. On the road of practicing innovation, Xiaomi has been at the forefront and has been recognized by the global market.

　　How big is the market for new energy vehicles going to the countryside? Recently, the China Association of Automobile Manufacturers (hereinafter referred to as the China Automobile Association) issued the "Notice on the Application of New Energy Vehicles Going to the Countryside in 2022" (hereinafter referred to as the "Notice"). According to this document, in order to continuously eliminate old and discontinued models and promote more new energy models that adapt to rural consumption characteristics into the model catalog for going to the countryside, car companies need to make a unified declaration for the models participating in the going to the countryside. The deadline for declaration is March 10, 2022.

　　Fu Bingfeng, vice-chairperson and secretary-general of the China Automobile Association, said: "This is a critical period for the promotion of new energy vehicles. It is very important to sink into the fourth and fifth tier markets and help rural consumption upgrade. This is an incremental market."

　　According to the data of the China Automobile Association, the cumulative sales volume of new energy vehicles to the countryside in 2021 was 1.068 million, an increase of 169.2% year-on-year. In addition, among the 66 models of new energy vehicles to the countryside in 2021, the vehicles were mainly small and mini vehicles with a price of less than 100,000 yuan and a cruising range of less than 300 kilometers. It is generally believed in the industry that the small and micro models of new energy vehicles to the countryside will replace low-speed electric vehicles such as "Laotou Le" and have good prospects in the rural market.

　　Sinking or normalization, replacing rural "old man music"

　　In recent years, the income growth and consumption expenditure growth of rural residents in China are faster than those of urban residents, and their motorized travel needs are urgent, but the overall vehicle penetration rate is low. The electric vehicle utilization rate of rural residents is less than 1%, which is only 1/3 of that of urban residents, and has sufficient room for growth.

　　In the industry’s view, the current auto growth area in our country has begun to expand and transfer from the east to the central and western regions, from first- and second-tier cities to third- and fourth-tier cities, and from cities to rural areas. According to the "China Rural Electric Vehicle Travel Research" released by the China Electric Vehicle 100 People’s Association, by 2030, the number of cars per thousand people in rural areas in our country will reach 159, and the total number of cars will be 70.01 million; this figure also includes the rigid demand of consumers in rural areas for the first purchase, and also includes the replacement demand for low-speed electric vehicles. The industry believes that the electrification of the rural market has great potential.

　　From the demand of third- and fourth-tier cities and rural markets, consumers travel radius is small, more than 80% of households overall average daily travel mileage of less than 50 kilometers, short and medium range new energy models will be able to meet the needs of mainstream consumer groups; from the product and price span, the mileage of 120 kilometers to 400 kilometers, the price of the model between 30,000 – 80,000 yuan is more in line with market demand; from the rural market as a whole, due to the driving license, driver’s license and other restrictions, commonly known as "old man Le" low-speed electric vehicles in the rural market more popular.

　　Therefore, among the 66 models of new energy vehicles to the countryside in 2021, the vehicles are mainly small and mini cars with a price of less than 100,000 yuan and a cruising range of less than 300 kilometers, and the car companies make profits ranging from 3,000 yuan to 8,000 yuan.

　　Xu Haidong, deputy chief engineer of the China Association of Automobile Manufacturers, believes that new energy vehicles have done better in terms of quality, handling, etc., with higher comfort and safety. The low cost of the A00 class, which focuses on the rural market, has also been highlighted to the greatest extent.

　　The industry generally believes that A00-level new energy passenger vehicles are a substitute for low-speed electric vehicles such as "Old Man Le", and have a good development prospect in the rural market. Cui Dongshu, secretary general of the National Passenger Car Market Information Association, also has the same view. He believes that A00-level new energy passenger vehicles have a good market prospect in the rural market and can also help improve the travel environment in rural areas.

　　Li Jinyong, president of the New Energy Vehicle Branch of the Automobile Chamber of Commerce of the All-China Federation of Industry and Commerce, once said, "In 2021, unrestricted cities contributed 70% of the sales of new energy vehicles, of which 58% of users purchased A00-class electric vehicles. A00-class electric vehicles will take the lead in replacing fuel vehicles of the same level based on the advantages of more than half the travel cost of fuel vehicles. If the lack of core is not serious, the production and sales will reach 1.50 million to 2 million vehicles in 2022."

　　The industry believes that, although there are fewer A00-class models currently available, due to the fact that they have attracted more attention under the impetus of new energy going to the countryside, car companies are also harvesting sales performance in new energy vehicles going to the countryside, so there may be more products developed for third- and fourth-tier and township rural areas.

　　The industry expects that in the next few years, if the motorized travel needs of rural residents can be met, it is expected that a 500 billion-scale super car market will be successfully leveraged, among which small economical electric vehicles will become the main new products in the rural market, or will be formed in third- and fourth-tier cities and rural areas.

　　Sales of new energy vehicles to the countryside are growing faster than the overall market

　　2022 is already the third year for new energy vehicles to enter the countryside.

　　In July 2020, MIIT, the Ministry of Agriculture and Rural Affairs, and the Ministry of Commerce jointly issued the "Notice on Launching Activities of New Energy Vehicles to the Countryside", which proposed to carry out activities of new energy vehicles to the countryside in China; thus also opened the curtain of new energy vehicles to the countryside. In March 2021, MIIT, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the Comprehensive Department of the National Energy Administration jointly issued the "Notice on Launching Activities of New Energy Vehicles to the Countryside in 2021", which made it clear that activities of new energy vehicles to the countryside would be carried out from March to December. In 2021, the area of new energy vehicles to the countryside will be further expanded, from 5 provinces in 2020 to 11 provinces.

　　From the recommended list of two batches of new energy vehicles going to the countryside in 2021, the main enterprises and models are independent brands and new car-making forces, including SAIC Motor Group, Dongfeng Motor, Great Wall Motor, BYD, Jianghuai Automobile, Chery Automobile, Weimar Automobile, and Zero Run Automobile.

　　According to the data of the China Automobile Association, the cumulative sales volume of new energy vehicles to the countryside in 2021 was 1.068 million, an increase of 169.2% year-on-year, and the growth rate was about 10 percentage points higher than that of the overall new energy vehicle market.

　　From the beginning of 2022, new energy vehicles going to the countryside will once again be included in the key tasks of various ministries and commissions.

　　In early January, the "Opinions" jointly issued by the National Energy Administration, the Ministry of Agriculture and Rural Affairs, and the National Rural Revitalization Bureau mentioned that it is necessary to guide charging business operators and new energy automobile enterprises to build charging and swapping power stations in large villages and towns, tourist attractions, and public parking lots. Priority is given to promoting the use of electric vehicles in official vehicles, buses, and taxis in counties, and promoting the application of new energy vehicles in tourist attractions and characteristic towns. Promote new energy vehicles to become an important part of rural microgrids, and vigorously support local development of new energy vehicles and home appliances to the countryside.

　　On January 21, the National Development and Reform Commission and other seven departments issued the "Implementation Plan for Promoting Green Consumption", which proposes to carry out in-depth activities of new energy vehicles to the countryside, encourage automobile companies to develop and promote new energy vehicles that are suitable for the travel needs of rural residents, of high quality and low price, advanced and applicable, and promote the improvement of the rural operation and maintenance service system. Reasonably guide consumers to purchase lightweight, miniaturized, and low-emission passenger vehicles.

　　According to the latest "Notice" issued by the China Automobile Association, the declared models of new energy vehicles going to the countryside still need to meet four conditions. First, the product quality is stable and suitable for rural consumption scenarios. Second, the price range of the model is basically the same as that of rural consumers. Third, there will be no suspension of production or sales of models in the next six months. Fourth, there is a suitable after-sales and sales network.

　　The shortcomings need to be made up, and the supporting measures should also be submerged into the countryside

　　It is generally believed that there are independent courtyards in rural areas, and the charging demand of new energy vehicles is relatively easy to meet. Consumers in rural areas can charge at home through slow charging. However, with the increase of vehicle mileage and driving radius, public charging piles also have an addressable market demand in rural areas.

　　At present, domestic charging piles are mainly concentrated in first- and second-tier cities, while the proportion of public charging piles in rural areas has been hovering at a low level; at the same time, the power grid infrastructure in rural areas is relatively weak. Cui Dongshu said that the entire infrastructure and supporting services in the rural market are still lacking, and a large number of charging equipment needs to be built.

　　In addition, the "Rural Electrification Survey Report" released by the China Electric Vehicle 100 People’s Association pointed out that although there are many models and versions of new energy passenger vehicles on sale in the domestic market, the sales of new energy vehicles to rural areas are still very limited. Existing models are greatly misaligned with the expectations of rural residents, and at the same time cannot meet the demand for light cargo in rural areas.

　　Not only that, after-sales is also a major problem. From the perspective of after-sales network installation, fuel vehicles are more complete, while the after-sales network of pure electric vehicles is more complete in first- and second-tier cities, while rural areas are still relatively lacking.

　　Xu Haidong said, "Car companies should further understand the needs of rural consumers, do a good job in cost control and quality control; in the current situation with a small number of outlets, do a good job in after-sales services and build infrastructure in rural areas."

　　In addition, the level of subsidies will also become a factor affecting the deployment of new energy vehicles to the countryside. Xu Haidong analyzed that there is currently a lack of directly quantified state subsidies; while local government subsidies vary, and many fuel vehicles and new energy subsidies are not separated, and the time is not uniform. All of the above will reduce the degree of incentive for consumers.

　　Although there are many shortcomings in new energy vehicles that need to be filled, it is undeniable that the third- and fourth-tier markets and rural markets are small in size but have great potential. They are one of the future incremental markets for new energy vehicles and will become a "booster" for the growth of the new energy vehicle market.

　　Memorabilia of new energy vehicles going to the countryside

　　● July 15, 2020

　　MIIT, the Ministry of Agriculture and Rural Affairs, and the Ministry of Commerce jointly issued the "Notice on Launching New Energy Vehicles to the Countryside", proposing to launch new energy vehicles to the countryside in China.

　　● March 26, 2021

　　MIIT, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the General Department of the National Energy Administration jointly issued the "Notice on Launching New Energy Vehicles to the Countryside in 2021", specifying that new energy vehicles will be launched from March to December.

　　● January 7, 2022

　　The National Energy Administration, the Ministry of Agriculture and Rural Affairs, and the National Rural Revitalization Bureau jointly issued the "Implementation Opinions on Accelerating the Transformation and Development of Rural Energy to Help Rural Revitalization", which mentioned strong support for local development of new energy vehicles to the countryside.

　　● January 21, 2022

　　The "Implementation Plan for Promoting Green Consumption" issued by the National Development and Reform Commission and seven other departments proposes to carry out in-depth activities of new energy vehicles to the countryside, and encourage automobile companies to develop and promote new energy vehicles suitable for the needs of rural residents.

　　February 17, 2022

　　The China Association of Automobile Manufacturers released the "2022 New Energy Vehicle to the Countryside Model Declaration Notice", launching a new round of new energy vehicles to the countryside in 2022.

　　Wang Linlin, Shell Financial Reporter of Beijing News

Continue reading »